Dive Brief:

• San Diego-based Harper Construction Company has paid $5.4 million to settle charges that it submitted fraudulent bills for work at two military bases, according to the Times of San Diego.
• The U.S. Attorney's office alleged that Harper used "sham" small disadvantaged businesses (DBEs) to make it appear as though it had used the services of legitimate DBEs, when it actually did the work through an affiliated business, Frazier Masonry Corp.
• The action against Harper originated when a whistleblower reported Harper and Frazier to authorities. The money paid by Harper settles a False Claims Act lawsuit filed by the whistleblower to share in a percentage, $1.48 billion, of the settlement.

Dive Insight:

Harper is a private company that works on a large amount of government contracting. The charges and settlement cover work Harper performed at two North Carolina military bases, Camp Pendleton and Camp Lejeune, which required Harper to subcontract a percentage of its work to DBEs.

DBE programs aim to create a level playing field by providing opportunities for government contracts to go to businesses owned by women and minorities. 

This San Diego case is the most recent in a string of DBE fraud allegations against construction companies. In February, three Pennsylvania steel executives — who had pleaded guilty to wire fraud in connection with almost $19 million worth of state and federal highway projects they secured through a shell minority business — were sentenced to probation and were ordered to pay fines totaling more than $1.3 million.

In another military construction-related case, a former U.S. Navy contractor pleaded guilty in February to certifying to the Navy that he paid subcontractors more than $1.2 million when he didn’t pay them anything, even though he collected the money to pay them from the Navy.